China makes breakthrough in allowing private capital in telecom

China's Industry and Information Technology Ministry (MIIT) on Thursday granted licenses to 11 private enterprises to pilot resale of certain mobile services.

The move will enable the firms, including e-commerce giant Jingdong Mall, to partner and compete with the backbone operators through the resale of mobile services, marking a breakthrough for China to further open the largely monopolized sector.

In a statement on its website, the ministry described the move as an important part of restructuring and reform in the telecom industry.

"This will help competition and innovation while offering more choices and better services to consumers," the post read.

To gain the licenses, private firms must sign a cooperation agreement with one of the three backbone operators -- China Mobile, China Unicom and China Telecom, before filing an application with the MIIT.

As the pilot scheme moves on, the ministry will grant more licenses to qualified private businesses.

The latest development comes after an MIIT guideline last June unlocked the gate to the telecom sector for private capital, offeringparticipation in eight major areas, including the resale of mobile communication businesses.

The number of Chinese mobile phone users hit 1.22 billion at the end of October. Among them, 67.19 percent, or 817 million mobile phone users, are connected to the Internet and 34.5 percent of them are 3G users, according to the MIIT figures.

The MIIT in early December issued 4G licenses to the three telecom backbone operators, marking the beginning of a new era in China's high-speed mobile network.